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Article

How Consumers Read and Memorize a Price

Marketing
Published on:

Researchers in Marketing Gilles Laurent of ESSEC Business School and Marc Vanhuele of HEC Paris study how consumers read and assimilate prices while shopping. Their novel theory refutes the intuitive hypothesis made by previous research in consumer behavior that prices are read from left to right, and has implications for policy regulations, to prevent misleading consumers in their purchase decisions.

Previous research in consumer behavior says that consumers read a price digit by digit, left to right, or would possibly even read only the leftmost digits and neglect the rest of the price. We examine price reading by using eye-movement recording and refute this theory. 

To read a price, consumers always fix both euros and cents

In contrast, we find in three eye-tracking studies that consumers use multiple eye fixations to read a price. The first fixation falls on average between the first third and middle of the price. It is followed by alternating eye movements from right to left and from left to right. The most surprising finding is that, overall, in their price reading, consumers pay as much attention to cents as to euros (by the way, the results undoubtedly would apply to dollars and pounds as well, as to any currency in which prices comprise a cents part).

Why then do consumers pay so much attention to cents, while it is obvious that their value is much less important than the euros? We think the reason is related to the challenges of encoding prices in order to memorize them, even for a very brief moment, for instance to compare a price to another one next to it while shopping. Human short-term verbal memory is subject to a strong limitation. We are able to remember only as many words as we can articulate in about two seconds. Thus, when the verbal form of the actual price is simple and short (ex. 3.10), it can be encoded as it is, while, when it is complex (ex. 17.77), it is encoded in a simplified verbal form. 

 

Our research unveils that prices are not read from left to right, and this has implications to prevent misleading consumers in their purchase decisions.

 

Using large in-store price knowledge surveys, we observe that consumers encode the price as it is in about 40% of cases and simplify it in another 40% (they do not encode the price in the remaining 20%). Verbal complexity of the price indeed predicts when it will be simplified. This simplification is almost always in the cents part (it is either shortened or suppressed by rounding) and reduces by about 50% the length, in syllables, of the encoded price. This implies that, even when in-store shoppers have not reported accurately the cents of a posted price, they must have seen those cents because it is their complexity that led to the simplification. 
 

Applications

Psychological prices (ending in -9 or -99 or -999) are used a lot. A previous explanation for their effect on sales was that consumers did not bother to read the price ending and therefore underestimated a price (e.g. 1,99 was read and remembered as 1). We show that consumers do not ignore the ending. But the ending has to be simplified to be memorized. The verbal length of a price is a simple empirical predictor of whether a price will be encoded as posted or simplified. This could be the basis for a public policy regulation, preventing the posting of unnecessary complexified prices. Such prices may mislead consumers in their price assessments and purchase decisions.

Methodology

We support our theory by empirical evidence from the eye-tracking lab and in-store shopper surveys. The eye-tracking studies showed the sequences of eye fixations (measures are taken 120 times per second), while surveys allowed us to evaluate how well the consumers recalled the prices they saw during shopping.
Article by Marc Vanhuele of HEC Paris and Gilles Laurent of ESSEC Business School, on their research publication, “How Do Consumers Read and Encode a Price?”, published in the Journal of Consumer Research in February 2023.

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